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Thursday, July 26, 2018

deduction of 50% towards developmental charges from the market value.= we find that firstly, the land acquired in question is a large chunk of land (101 acres approx.); Secondly, it is not fully developed; Thirdly, the respondents (landowners) have not filed any exemplar sale deed relating to large pieces of land sold in acres to prove the market value of the acquired land; Fourthly, exemplar relied on by the respondents, especially Ex.P­18 pertains to very small pieces of land (19 guntas); Fifthly, the three distinguishing features 15 noticed in the land in sale deed (Ex.P­18) are not present in the acquired land. 24) It was for the aforementioned reasons, in our opinion, the Reference Court was justified in making deduction of 50% towards developmental charges from the market value. = So far as the determination of market value made by the Reference Court is concerned, i.e., Rs.21,29,600/­ per acre, the same having been upheld by the High Court, we do not find any justification to examine this issue again. Even the learned ASG did not challenge this finding and confined his submissions only relating to the issue of percentage of the deduction only.

J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) These appeals are filed against the final
judgment and order dated 08.08.2014 passed by
the High Court of Judicature at Hyderabad for the
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State of Telangana and the State of Andhra Pradesh
in LAAS No.762 of 2010 and CO(SR) No.373 of 2011
whereby the High Court dismissed the appeal filed
by the appellant herein and partly allowed the cross
objections filed by the respondents herein and
enhanced the compensation as mentioned in detail
infra.
3) We herein set out the facts, in brief, to
appreciate the issues involved in these appeals.
4) 0n 12.11.2003, the State of Andhra Pradesh
issued a notification under Section 4 of the Land
Acquisition Act, 1894 (hereinafter referred to as “the
Act”) and acquired the land measuring about 101­
00 acres (SY No.398/3 and other connected survey
numbers) situated at Jagitial Municipality, District
Karimnagar (AP). The acquisition of land was for a
public purpose, namely, "laying new broad gauge
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single railway line from Karimnagar to Jagitial Phase
–II by the appellant­Railways". This was followed by
issuance of notification under Section 6 of the Act
and then possession on 02.12.2003.
5) The Land Acquisition Officer (LAO) started
proceedings under Section 11 of the Act for
determination of the compensation payable to the
landowners for their lands. By award No.26/2006
dated 14.07.2006, the LAO determined the market
value of the acquired land at the rate of
"Rs.1,30,000/­ per acre for wet lands" and
"Rs.1,24,000/­ per acre for dry lands". The LAO also
awarded compensation for structures, wells etc. to
some landowners.
6) The claimants (landowners) felt aggrieved and
sought reference under Section 18 of the Act to the
Civil Court in OP No.27/2007. By award dated
23.07.2010, the Civil Court (Sr. Civil Judge,
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Jagitial) re­determined the market value of the land
in question. The Reference Court determined the
market value of the acquired land at Rs.21,29,600/­
per acre uniformly. However, having regard to the
totality of facts of the case, the Reference Court
considered it just and proper to deduct 50%
towards developmental charges and accordingly
worked out the market value of the land at
"Rs.10,64,800/­ per acre" for being paid to the
landowners.
7) The appellant­Railways felt aggrieved and filed
appeal before the High Court of Andhra Pradesh
whereas the landowners also felt aggrieved and filed
cross objections claiming enhancement of the
market value determined by the Reference Court.
8) By impugned judgment, the High Court
dismissed the appeal filed by the appellant­Railways
and partly allowed the cross objections filed by the
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landowners and enhanced the compensation to
Rs.15,97,200/­ per acre. The High Court, upheld
the market value determined by the Reference Court
i.e. Rs.21,29,600/­ per acre but reduced the
deduction towards developmental charges from 50%
to 25% and accordingly worked out the
compensation “at the rate of Rs.15,97,200/­ per
acre”. It is against this judgment, the appellantRailways
felt aggrieved and filed the present appeals
by way of special leave before this Court.
9) Heard Mr. Vikramjit Banerjee, learned
Additional Solicitor General for the appellant­UOI
and Mr. B. Adinarayana Rao, learned senior counsel
for the respondents.
10) Mr. Vikramjit Banerjee, learned Additional
Solicitor General appearing for the appellant while
assailing the legality and correctness of the
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impugned judgment essentially made two
submissions.
11) In the first place, learned ASG contended that
the High Court erred in further enhancing the
compensation at Rs.15,97,200/­ per acre.
12) According to him the compensation
determined by the Reference Court payable at the
rate of Rs.10,64,800/­ per acre was just, legal and
proper and, therefore, it did not call for any further
enhancement.
13) In the second place, learned ASG urged that
having placed reliance on exemplar Sale Deed (ExP­18)
for determining the market value, the
Reference Court rightly deducted 50% towards
development charges, whereas the High Court erred
in deducting 25% towards developmental charges.
14) According to learned ASG, the High Court
ought to have appreciated that there were three
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distinguishing factors appearing from the exemplar
sale deed (Ex.P­18). Due to these three factors,
deduction of 50% towards developmental charges
from the market value was called for. These factors
are, First, Sale Deed (Ex.P­18) was for a very small
piece of land (19 Guntas=1/2 acre); Second, the
land which was the subject matter of Ex­P­18 had a
peculiar site because it was situated facing two
roads ­ one on the east side and other on the north
side; and Third, it was a developed land.
15) It was, therefore, urged that so far as the land
in question is concerned, the same did not have
these factors and, therefore, the Reference Court
rightly considered it proper to deduct 50% towards
developmental charges from the market value which
was worked out on the basis of Sale Deed (Ex.P­18).
It was urged that the High Court without assigning
any reasons much less cogent reasons erred in
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reducing developmental charges from 50% to 25%
from the market value. Learned ASG, therefore,
prayed for restoration of the award of the Reference
Court in place of impugned judgment of the High
Court.
16) Per contra, learned senior counsel for the
respondents (landowners) supported the impugned
judgment and contended that it does not call for
any interference and hence the appeals deserve to
be dismissed.
17) The question arises for consideration in these
appeals is whether the High Court was justified in
deducting 25% towards developmental charges from
the market value of the land in question against
50% deduction made by the Reference Court. In
other words, having regard to the facts and
circumstances of the case, whether the Reference
Court was justified in deducting 50% from the
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market value of the land or whether the High Court
was justified in deducting 25%.
18) Before we examine the facts of this case, it is
necessary to take note of general principles of law on
the subject in question which are laid down by this
Court in several cases and some of which were also
cited at the Bar by the learned counsel for the parties.
Indeed, if we may say so, law on the several issues
urged herein by the learned counsel for the parties is
already settled by this Court and what has varied in
its application depends on the facts of each case.
19) In Chimanlal Hargovinddas vs Special Land
Acquisition Officer, Poona & Anr. (1988) 3 SCC 751,
this Court dealt with the question as to how the Court
should determine the valuation of the lands under
acquisition and what broad principle of law relating to
acquisition of land under the Act should be kept in
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consideration to determine the proper market value of
the acquired land.
20) In Para 4 of the judgment, this Court laid down
as many as 17 principles, which are reproduced below
for perusal:
“(1) to (4)………………………………….
(5) The market value of land under
acquisition has to be determined as on the
crucial date of publication of the notification
under Section 4 of the Land Acquisition Act
(dates of notifications under Sections 6 and 9
are irrelevant).
(6) The determination has to be made
standing on the date line of valuation (date of
publication of notification under Section 4) as if
the valuer is a hypothetical purchaser willing to
purchase land from the open market and is
prepared to pay a reasonable price as on that
day. It has also to be assumed that the vendor is
willing to sell the land at a reasonable price.
(7) In doing so by the instances method,
the court has to correlate the market value
reflected in the most comparable instance
which provides the index of market value.
(8) Only genuine instances have to be
taken into account. (Sometimes instances are
rigged up in anticipation of acquisition of land.)
(9) Even post­notification instances can
be taken into account (1) if they are very
proximate, (2) genuine and (3) the acquisition
itself has not motivated the purchaser to pay a
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higher price on account of the resultant
improvement in development prospects.
(10) The most comparable instances out
of the genuine instances have to be identified
on the following considerations:
(i) proximity from time angle,
(ii) proximity from situation angle.
(11) Having identified the instances
which provide the index of market value the
price reflected therein may be taken as the
norm and the market value of the land under
acquisition may be deduced by making suitable
adjustments for the plus and minus factors visà­vis
land under acquisition by placing the two
in juxtaposition.
(12) A balance­sheet of plus and minus
factors may be drawn for this purpose and the
relevant factors may be evaluated in terms of
price variation as a prudent purchaser would do.
(13) The market value of the land under
acquisition has thereafter to be deduced by
loading the price reflected in the instance taken
as norm for plus factors and unloading it for
minus factors.
(14) The exercise indicated in clauses
(11) to (13) has to be undertaken in a common
sense manner as a prudent man of the world of
business would do. We may illustrate some such
illustrative (not exhaustive) factors:
Plus factors Minus factors
1. smallness of size 1. largeness of area
2. proximity to a road 2. situation in the interior at a
distance from the road
3. frontage on a road 3. narrow strip of land with very
small frontage compared to
depth
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4. nearness to developed area 4. lower level requiring the
depressed portion to be filled
up
5. regular shape 5. remoteness from developed
locality
6. level vis­à­vis land under
acquisition
6. some special
disadvantageous factor which
would deter a purchaser
7. special value for an owner
of an adjoining
property to whom it may
have some very special
advantage
(15) The evaluation of these factors of
course depends on the facts of each case. There
cannot be any hard and fast or rigid rule.
Common sense is the best and most reliable
guide. For instance, take the factor regarding
the size. A building plot of land say 500 to 1000
sq. yds. cannot be compared with a large tract
or block of land of say 10,000 sq. yds. or more.
Firstly while a smaller plot is within the reach
of many, a large block of land will have to be
developed by preparing a lay out, carving out
roads, leaving open space, plotting out smaller
plots, waiting for purchasers (meanwhile the
invested money will be blocked up) and the
hazards of an entrepreneur. The factor can be
discounted by making a deduction by way of an
allowance at an appropriate rate ranging
approximately between 20 per cent to 50 per
cent to account for land required to be set apart
for carving out lands and plotting out small
plots. The discounting will to some extent also
depend on whether it is a rural area or urban
area, whether building activity is picking up,
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and whether waiting period during which the
capital of the entrepreneur would be locked up,
will be longer or shorter and the attendant
hazards.
(16) Every case must be dealt with on its
own fact pattern bearing in mind all these
factors as a prudent purchaser of land in which
position the judge must place himself.
(17) These are general guidelines to be
applied with understanding informed with
common sense.”
21) These principles are invariably kept in mind by
the Courts while determining the market value of the
acquired lands (also see Union of India vs. Raj
Kumar Baghal Singh (Dead) Through Legal
Representatives & Ors., (2014) 10 SCC 422).
22) In addition to these principles, this Court in
several cases have laid down that while determining
the true market value of the acquired land especially
when the acquired land is a large chunk of
undeveloped land, it is just and reasonable to make
appropriate deduction towards expenses for
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development of acquired land. It has also been
consistently held that at what percentage the
deduction should be made varies from 10% to 86%
and, therefore, the deduction should be made keeping
in mind the nature of the land, area under acquisition,
whether the land is developed or not and, if so, to
what extent, the purpose of acquisition, etc. It has
also been held that while determining the market
value of the large chunk of land, the value of smaller
pieces of land can be taken into consideration after
making proper deduction in the value of lands
especially when sale deeds of larger parcel of land are
not available. This Court has also laid down that the
Court should also take into consideration the
potentiality of the acquired land apart from other
relevant considerations. This Court has also
recognized that the Courts can always apply
reasonable amount of guesswork to balance the
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equities in order to fix a just and fair market value in
terms of parameters specified under Section 23 of the
Act. (See Trishala Jain & Anr. Vs. State of
Uttaranchal & Anr., (2011) 6 SCC 47 and Vithal Rao
& Anr. Vs. Special Land Acquisition Officer, (2017)
8 SCC 558)
23) Keeping in mind the aforementioned principles,
when we take note of the facts of the case at hand, wefind that firstly, the land acquired in question is alarge chunk of land (101 acres approx.); Secondly, it isnot fully developed; Thirdly, the respondents(landowners) have not filed any exemplar sale deedrelating to large pieces of land sold in acres to provethe market value of the acquired land; Fourthly,exemplar relied on by the respondents, especiallyEx.P­18 pertains to very small pieces of land (19guntas); Fifthly, the three distinguishing features15noticed in the land in sale deed (Ex.P­18) are notpresent in the acquired land. 24) It was for the aforementioned reasons, in ouropinion, the Reference Court was justified in makingdeduction of 50% towards developmental charges fromthe market value. The High Court, in our opinion, did
not assign any good reason as to why and on what
basis, it considered proper to make deduction towards
developmental charges at the rate of 25% in place of
50%.
25) This Court has held in Trishala Jain’s case
(supra) that it depends upon the facts of each case to
decide for determination of the market value of the
land as to what percentage should be adopted for
deduction. In our opinion, the reasons mentioned
above were rightly made basis by the Reference Court
to support the deduction of 50%.
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26) So far as the determination of market value madeby the Reference Court is concerned, i.e.,Rs.21,29,600/­ per acre, the same having been upheldby the High Court, we do not find any justification toexamine this issue again. Even the learned ASG didnot challenge this finding and confined hissubmissions only relating to the issue of percentage ofthe deduction only.
27) Learned counsel for the respondents was not able
to point out any fact/evidence which could persuade
us to uphold the reasoning and conclusion arrived at
by the High Court in the impugned judgment.
28) In view of the foregoing discussion, we are
inclined to uphold the reasoning and the conclusion
arrived at by the Reference Court instead of the High
Court.
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29) As a consequence of the foregoing discussion, the
appeals succeed and are accordingly allowed.
Impugned judgment is set aside and that of the
Reference Court (Civil Court) dated 23.07.2010 in OP
No.27/2007 is restored.